BOQ SHAREHOLDER REVIEW 2016

Transcription

1 BOQ SHAREHOLDER REVIEW 2016

2 A GOOD RESULT IN A CHANGING OPERATING ENVIRONMENT BOQ FY16 RESULTS FIND OUT MORE ABOUT HOW WE RE DELIVERING OUR STRATEGY AT BOQ.COM.AU/ANNUAL_REPORTS/2016 NET INTEREST MARGIN 1.94 % 3BPS RETURN ON EQUITY 10.3 % 40BPS PROFIT RESULTS ($) MILLIONS EARNINGS & DIVIDENDS (CENTS PER SHARE) CASH EARNINGS $360 M UP 1% SINCE FY15 STATUTORY NET PROFIT $338 M UP 6% SINCE FY15 BASIC CASH EARNINGS PER SHARE $96 C DOWN 2% SINCE FY15 DIVIDENDS PER SHARE $76 C UP 3% SINCE FY15 CASH COST TO INCOME RATIO 46.8 % 80BPS LOAN IMPAIRMENT EXPENSE ($) MILLIONS $67 M DOWN 9% SINCE FY SHAREHOLDER REVIEW 2016

3 CHAIRMAN & MANAGING DIRECTOR S MESSAGE 2016 HEAR FROM OUR CHAIRMAN & CEO AT BOQ.COM.AU/ANNUAL_REPORTS/2016 Dear Shareholder, BOQ has delivered an increased profit for a fourth successive year. This is a particularly good result in a challenging market, with net profit after tax increasing to $360 million and statutory profit after tax growing to $338 million. Given these results, the Board has declared a final dividend of 38 cents per share, taking the full year dividend to a record 76 cents per share has been a difficult year for the banking sector. Global economic uncertainty has driven market volatility, and domestically the economy continues to shift from its traditional reliance on mining investment. The low interest rate environment and competition for both lending and deposit growth has created margin pressure on both the asset and liability side of the balance sheet. Additionally, uncertainty remains around the next phase of banking industry regulation. These market conditions reinforce the need for BOQ to continue to deliver its strategy was a positive year for the bank as we broadened our distribution channels, focused on niche customer segments, improved our process capabilities and continued to create a culture that is a source of competitive advantage. Most importantly, we ve continued to implement our strategy without compromising credit quality and we ve stayed ahead of the regulatory curve with conservative lending policies and capital ratios. We believe we ve achieved the right balance between growth, asset quality and profitability to build a portfolio that performs throughout the business cycle. We would like to thank the collective efforts of everyone across the BOQ Group that has made this result possible has also seen some major governance changes at Board level. During the year we farewelled long-standing director Carmel Gray who has provided wise counsel over nearly a decade of service on the Board. We also farewelled director Neil Berkett whose extensive experience across the finance, digital media and telecommunications sectors provided the Board with important insight following the acquisition of Virgin Money (Australia). We thank Carmel and Neil for their invaluable service and wish them all the best for the future. We were also delighted to welcome some new faces to the Board. Karen Penrose joined in November, John Lorimer in January and more recently Warwick Negus, joined in September. Karen has 30 years business experience in the finance and corporate sectors, offering specialist knowledge in finance and capital markets, risk management and compliance. John has more than 20 years in financial services and brings significant expertise in retail financial services, governance, regulation and risk management. Warwick s extensive financial services industries background adds more than 20 years experience in investment banking and domestic and international funds management. We believe, these additions give the Board the right skills and experience to meet the needs of a rapidly changing market, and so we warmly welcome Karen, John and Warwick to the Board. Finally, we d also like to thank all of our shareholders for your strong ongoing support during This has enabled us to build a strong and profitable business that is delivering record earnings whilst maintaining a high quality loan portfolio and is positioning BOQ well for the future. Roger Davis Chairman Jon Sutton Managing Director & CEO 4 SHAREHOLDER REVIEW 2016

4 CUSTOMER IN CHARGE GO TO BOQ.COM.AU/ANNUAL_REPORTS/2016 TO FIND OUT HOW WE RE PUTTING OUR CUSTOMERS IN CHARGE WE RE IMPROVING OUR CUSTOMER EXPERIENCE BY PUTTING OUR CUSTOMERS IN CHARGE OF WHEN, WHERE AND HOW THEY CHOOSE TO INTERACT WITH US This year we ve continued to deliver on this by: > > Giving customers more product choice, and providing another avenue to diversify our customer base and grow our mortgage distribution, by writing our first home loans through our Virgin Money (Australia) Reward Me Home Loan. > > Being more accessible to the large number of customers who prefer to use brokers by expanding our broker program. Around half of all home loan customers use brokers. Three years in and we now have 4,000 accredited brokers writing 17% of our home loans. 6 SHAREHOLDER REVIEW 2016 > > Amplifying the voice of our customers by integrating customer feedback through a new team who will help us understand, prioritise and progress key initiatives that improve the customer experience. > > Meeting the needs of how our customers do their banking and the locations our customers choose to use by continuing to adjust our branch network structure. > > Giving customers more service options and removing barriers between our people and customers through the open plan design and new technology used at our new ICON branches. We ve been fitting out more branches with the new ICON style - we now have 13 ICON branches. > > Giving customers direct social media access to their local branch by rolling out Facebook pages for 163 branches and providing social media support through our Contact Centre. > > Improving the look and feel of our mobile banking app with a new fully customisable user interface by introducing a dedicated tablet app for mobile banking. LOOKING AHEAD We ve opened up a range of new customer channels, but there s more we can do to empower our customers to bank their way. Over the next few years we ll continue expanding our broker presence for both BOQ and Virgin Money (Australia). We ll also continue upgrading our digital channels improving our mobile apps for Virgin Money (Australia) and BOQ, upgrading our website platform across the Group, and upgrading to the latest smart ATMs with touch screens. We ll also be introducing e-signatures, an important milestone to being able to offer online lending applications.

5 GROW THE RIGHT WAY WE RE BUILDING A STRONG AND PROFITABLE BUSINESS BY MAKING THE RIGHT DECISIONS ABOUT WHERE AND HOW WE GROW WHICH INCLUDES FOCUSING ON NICHE CUSTOMER SEGMENTS THAT VALUE AN INTIMATE BANKING RELATIONSHIP This year we ve continued to deliver on this by: > > Continuing to grow under our > > Continuing to strengthen our niche strategy that focuses balance sheet by building out on micro to mid-market sized the diversity, capacity and businesses in healthcare and resilience of our funding profile. retirement living, agriculture, In addition to our ongoing property, hospitality and diverse transaction program that professional service sectors. continues to lengthen our funding A highlight of this strategy has profile, we ve also undertaken been from BOQ Specialist, which an extensive investor marketing focuses on lending to medical and program to provide broader accounting professionals which options for funding across contributed $1.5 billion in home different currencies. loans this financial year. > > Continuing our focus on credit > > Providing better outcomes for our Owner Managers and their customers by moving our Owner Managers onto the new balanced scorecard as they renew their franchise agreements. The scorecard includes a wider range of metrics including compliance and cross sales. Almost 50% of our Owner Managers are now on the new agreement. > > Expanding BOQ Finance s presence and capabilities in key target areas including non-motor floor plan, vendor and technology finance and wholesale receivables funding. quality discipline by taking the conservative approach of validating all home loan applications through a centralised process. > > Restructuring our credit team and streamlining processes so applications can go to just one person for a faster credit decision. We also introduced specialist risk experts aligned to our niche customer strategy and integrated more accurate data into a single view for them. Together these initiatives ensure more sophisticated and responsive pricing, faster response times and a better customer experience, even for complex clients. > > Simplifying policies and procedures, increasing training and increasing monitoring and performance management to embed a stronger risk culture and lift compliance results across the Bank. > > Strengthening our risk culture by understanding our strengths and weaknesses through a Group-wide Risk Survey that benchmarks our risk and governance against peers. The results are used to drive future improvements to our risk culture and governance programs. > > Strengthening our three lines of defence model to risk management by increasing resources and aligning the structure with business lines to support the substantial change agenda underway. > > Demonstrating the increasing sophistication of our risk oversight which is evident by S&P s upgrade to our business position rating. > > Continuing to grow the right way as demonstrated by winning The Asian Banker Magazine s 2016 Liquidity Risk Management Award, winning the Australian Banking and Finance 2016 Award for Chief Risk Officer of the Year for the third year in a row and winning the Australian Banking and Finance 2016 Award for Chief Financial Officer of the Year. LOOKING AHEAD We ve got strong foundations, but we re not done yet. We re maturing our deposit strategy by identifying key product and service gaps for priority customer segments which will help ensure we fund future asset growth at the right price. We ll further align the risk function with the broader business to support strategy. And by leveraging technology and data analytics, we ll continue to build out the efficiency and quality of our credit decisions. We ll also be uplifting our compliance management framework from Australian to global standards. 8 SHAREHOLDER REVIEW 2016

6 ALWAYS A BETTER WAY GO TO BOQ.COM.AU/ANNUAL_REPORTS/2016 TO FIND OUT WHAT ALWAYS A BETTER WAY MEANS TO US WE RE COMMITTED TO MAKING OUR PROCESSES SIMPLER, FASTER AND SMARTER This year we ve continued to deliver on this by: > > Covering 30% of mortgage applications through our new digital lending origination system which streamlines our process and improves the speed of our lending decisions and productivity, giving customers a more positive experience. > > Increasing digitisation of our commercial lending process, enabling quicker credit decisions, supporting commercial data analytics and strengthening our customer relationships. > > Improving our data analytics to deepen our customer and portfolio insight. This will help us accurately service the right customers at the right time through the right channels with the right products. We ve initially focused on using this capability to improve customer retention. 10 SHAREHOLDER REVIEW 2016 > > Furthering our digital enablement plan and technology strategy through the development of a dedicated laboratory space to accelerate projects and incubate ideas. > > Holding strategy alignment workshops with key strategic partners and vendors. > > Accessing economies of scale and efficiency through our procurement processes, for example by introducing a Group-wide legal panel which is a set list of providers to be used for different legal services. This approach enables BOQ to develop trusted partner relationships, improve the quality of services we receive and reduce our external legal spend. > > Strengthening employee collaboration by consolidating different platforms across the Group, upgrading our video conferencing capabilities and implementing wifi across all support centres. LOOKING AHEAD But we ve only just scratched the surface, the most exciting part of our digital journey is still to come. In the years ahead we ll bring more products onto the lending origination system, introduce more automation in our commercial lending processes, and launch BOQ Finance s new Lease Management System providing more cost and time efficiency across the Bank. We ll continue maturing our data analytics, building a single view of customers regardless of which brand they re with, to help us service our key customer segments. This will allow us to make more integrated risk and pricing decisions and ultimately, provide more personalised customer service. We re focused on uplifting our project management and digital capability to introduce more accelerated ways of working. This will be supported by extending video conferencing to more meeting rooms which will increase employee collaboration across the country and reduce travel expenses. We ll be streamlining and digitising processes to improve the customer on-boarding process across products. We ll finish rolling out wifi to all our branches and we ll continue to leverage our relationships with key vendors to drive more collaboration, co-investment and innovation. Where there are gaps in our capability and it makes sense to do so, we ll investigate partnership opportunities with fintechs whose offerings align with our niche customer strategy.

7 LOVED LIKE NO OTHER IT S WHAT WE DO INSIDE AND OUT TO LIVE OUR BRAND PROMISE THAT PROVES IT S POSSIBLE TO LOVE A BANK This year we ve continued to deliver on this by: > > Launching our 144 culture uniting our focus on 1 mission to be Australia s most loved bank, 4 strategic pillars customer in charge, grow the right way, there s always a better way, loved like no other and our 4 values of integrity, collaboration, impact, passion. > > Continuing our strong focus on inclusion and gender diversity. A third of our leaders are women and we have a range of actions in place to lift this to 50 per cent by We ve achieved this by having a very clear focus on creating a more diverse workforce, including target setting, rolling out training for women in leadership and unconscious bias training, and reviewing our recruitment and selection practices. 12 SHAREHOLDER REVIEW 2016 > > Rolling out leadership development programs on collaboration, change, ethics and unconscious bias, as well as introducing personalised leadership development programs. > > Supporting all of our colleagues to develop and grow their careers by accessing and participating in a wide range of development programs that use different delivery channels. We also ensure all of our vendor partners are focused on diversity. > > Partnering with RFi Group, one of Australia s leading market research and business intelligence companies, to access deeper analysis of what drives our customer satisfaction scores and how we can improve our customer experience. > > Continuing our annual Banking on our Kids appeal, raising more than $204,000 for the Children s Hospital Foundations Australia. > > Proving that it is possible to love a bank, BOQ took out the top spot in East and Partners business banking customer satisfaction survey for the eighth straight year, for the third year running were named Relationship Bank of the Year at the 2016 AB&F Business Banking Awards and were recognised as best in class in several key customer satisfaction categories in the East and Partners Australian Asset and Equipment Finance Market Analysis report. LOOKING AHEAD And while we re definitely likable, we ve still got a lot more love to give! Next year our flexible working policy will be piloted in more parts of our business such as our contact centres and branches. We ll introduce a new internal female leadership development program and streamline our leadership on-boarding process. We ll broaden our range of ethics training to cover more employees and more topics through online delivery. We ll also work hard to continue lifting our customer satisfaction scores to live our vision of being Australia s most loved bank.

8 DELIVERING OUR STRATEGY CUSTOMER IN CHARGE VIRGIN MONEY AUSTRALIA REWARD ME HOME LOAN LAUNCHED GROW THE RIGHT WAY THERE S ALWAYS A BETTER WAY 30 % OF MORTGAGE APPLICATIONS COVERED BY OUR NEW DIGITAL LENDING SYSTEM $500 M 16% GROWTH ( ) IN LENDING TO NICHE BUSINESS SEGMENTS IN FY16 LOVED LIKE NO OTHER LAUNCHED OUR 144 CULTURE UNITING OUR FOCUS ON 1 MISSION 4 STRATEGIC PILLARS 4 VALUES ANNUAL GENERAL MEETING BOQ s Chairman Roger Davis and Managing Director and Chief Executive Officer Jon Sutton will address shareholders at the Bank s Annual General Meeting 10am (AEST) on Wednesday, 30 November 2016 Ballroom Level 5, Hilton Hotel, Brisbane Webcast and speeches will be made available at KEY SHAREHOLDER DATES Annual General Meeting 30 November 2016 Financial half year end 28 February 2017 Half year results and interim dividend announcement 30 March 2017 Financial full year end 31 August 2017 Full year results and final dividend announcement 12 October 2017 Annual General Meeting 30 November 2017 SHARE REGISTRY Link Market Services Limited Australia: International: Fax: Mail: Bank of Queensland Limited C/ - Link Market Services Locked Bag A14 Sydney South, NSW boq@linkmarketservices.com.au Website: BOQ CUSTOMER SERVICE (within Australia) (overseas) Bank of Queensland Limited ABN SHAREHOLDER INFORMATION 14 SHAREHOLDER REVIEW 2016

9 FIND OUT MORE ABOUT HOW WE RE DELIVERING OUR STRATEGY AT